Jurisdiction of the Courts



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CASEBOOK
BUSINESS LAW


  1. Jurisdiction of the Courts




SIERRA CLUB V. MORTON, SECRETARY OF THE INTERIOR, ET AL.

U.S. SUPREME COURT



405 U.S. 727 (1972)


Decided April 19, 1972

STEWART, J., delivered the opinion of the Court, in which BURGER, C. J., and WHITE and MARSHALL, JJ., joined. DOUGLAS, J., BRENNAN, J., and BLACKMUN, J., filed dissenting opinions. POWELL and REHNQUIST, JJ., took no part in the consideration or decision of the case.

MR. JUSTICE STEWART delivered the opinion of the Court.

I


The Mineral King Valley is an area of great natural beauty nestled in the Sierra Nevada Mountains in Tulare County, California, adjacent to Sequoia National Park. . .

The United States Forest Service, which is entrusted with the maintenance and administration of national forests, began in the late 1940's to give consideration to Mineral King as a potential site for recreational development. Prodded by a rapidly increasing demand for skiing facilities, the Forest Service published a prospectus in 1965, inviting bids from private developers for the construction and operation of a ski resort that would also serve as a summer recreation area. The proposal of Walt Disney Enterprises, Inc., was chosen from those of six bidders . . .

The final Disney plan, approved by the Forest Service in January 1969, outlines a $35 million complex of motels, restaurants, swimming pools, parking lots, and other structures designed to accommodate 14,000 visitors daily. This complex is to be constructed on 80 acres of the valley floor under a 30-year use permit from the Forest Service. Other facilities, including ski lifts, ski trails, a cog-assisted railway, and utility installations, are to be constructed on the mountain slopes and in other parts of the valley under a revocable special-use permit. To provide access to the resort, the State of California proposes to construct a highway 20 miles in length. A section of this road would traverse Sequoia National Park, as would a proposed high-voltage power line needed to provide electricity for the resort. Both the highway and the power line require the approval of the Department of the Interior, which is entrusted with the preservation and maintenance of the national parks.

Representatives of the Sierra Club, who favor maintaining Mineral King largely in its present state, . . . unsuccessfully sought a public hearing on the proposed development in 1965 . . . In June 1969 the Club filed the present suit in the United States District Court for the Northern District of California, seeking a declaratory judgment that various aspects of the proposed development contravene federal laws and regulations governing the preservation of national parks, forests, and game refuges, and also seeking preliminary and permanent injunctions restraining the federal officials involved from granting their approval or issuing permits in connection with the Mineral King project. . . .

After two days of hearings, the District Court granted the requested preliminary injunction. It rejected the respondents' challenge to the Sierra Club's standing to sue, and determined that the hearing had raised questions "concerning possible excess of statutory authority, sufficiently substantial and serious to justify a preliminary injunction . . . ." The respondents appealed, and the Court of Appeals for the Ninth Circuit reversed. . . . The court thus vacated the injunction. The Sierra Club filed a petition for a writ of certiorari which we granted, to review the questions of federal law presented.

II


The first question presented is whether the Sierra Club has alleged facts that entitle it to obtain judicial review of the challenged action. Whether a party has a sufficient stake in an otherwise justiciable controversy to obtain judicial resolution of that controversy is what has traditionally been referred to as the question of standing to sue. . . . .

III


The injury alleged by the Sierra Club will be incurred entirely by reason of the change in the uses to which Mineral King will be put, and the attendant change in the aesthetics and ecology of the area. Thus, in referring to the road to be built through Sequoia National Park, the complaint alleged that the development "would destroy or otherwise adversely affect the scenery, natural and historic objects and wildlife of the park and would impair the enjoyment of the park for future generations." . . . .

The impact of the proposed changes in the environment of Mineral King will not fall indiscriminately upon every citizen. The alleged injury will be felt directly only by those who use Mineral King and Sequoia National Park, and for whom the aesthetic and recreational values of the area will be lessened by the highway and ski resort. The Sierra Club failed to allege that it or its members would be affected in any of their activities or pastimes by the Disney development. Nowhere in the pleadings or affidavits did the Club state that its members use Mineral King for any purpose, much less that they use it in any way that would be significantly affected by the proposed actions of the respondents.

The Club apparently regarded any allegations of individualized injury as superfluous, on the theory that this was a "public" action involving questions as to the use of natural resources, and that the Club's longstanding concern with and expertise in such matters were sufficient to give it standing as a "representative of the public". This theory reflects a misunderstanding of our cases . . . .

The Sierra Club is a large and long-established organization, with a historic commitment to the cause of protecting our Nation's natural heritage from man's depredations. But if a "special interest" in this subject were enough to entitle the Sierra Club to commence this litigation, there would appear to be no objective basis upon which to disallow a suit by any other bona fide "special interest" organization, however small or short-lived. And if any group with a bona fide "special interest" could initiate such litigation, it is difficult to perceive why any individual citizen with the same bona fide special interest would not also be entitled to do so.

The requirement that a party seeking review must allege facts showing that he is himself adversely affected does not insulate executive action from judicial review, nor does it prevent any public interests from being protected through the judicial process. It does serve as at least a rough attempt to put the decision as to whether review will be sought in the hands of those who have a direct stake in the outcome. That goal would be undermined were we to construe the APA to authorize judicial review at the behest of organizations or individuals who seek to do no more than vindicate their own value preferences through the judicial process. The principle that the Sierra Club would have us establish in this case would do just that.

As we conclude that the Court of Appeals was correct in its holding that the Sierra Club lacked standing to maintain this action, we do not reach any other questions presented in the petition, and we intimate no view on the merits of the complaint. The judgment is Affirmed.


MR. JUSTICE POWELL and MR. JUSTICE REHNQUIST took no part in the consideration . . . of this case.

MR. JUSTICE DOUGLAS, dissenting.

I share the views of my Brother BLACKMUN and would reverse the judgment below.

The critical question of "standing" would be simplified and also put neatly in focus if we fashioned a federal rule that allowed environmental issues to be litigated before federal agencies or federal courts in the name of the inanimate object about to be despoiled, defaced, or invaded by roads and bulldozers and where injury is the subject of public outrage. Contemporary public concern for protecting nature's ecological equilibrium should lead to the conferral of standing upon environmental objects to sue for their own preservation. . . . This suit would therefore be more properly labeled as Mineral King v. Morton.

Inanimate objects are sometimes parties in litigation. A ship has a legal personality, a fiction found useful for maritime purposes. The corporation sole - a creature of ecclesiastical law - is an acceptable adversary and large fortunes ride on its cases. The ordinary corporation is a "person" for purposes of the adjudicatory processes, whether it represents proprietary, spiritual, aesthetic, or charitable causes.

So it should be as respects valleys, alpine meadows, rivers, lakes, estuaries, beaches, ridges, groves of trees, swampland, or even air that feels the destructive pressures of modern technology and modern life. The river, for example, is the living symbol of all the life it sustains or nourishes -- fish, aquatic insects, water ouzels, otter, fisher, deer, elk, bear, and all other animals, including man, who are dependent on it or who enjoy it for its sight, its sound, or its life. The river as plaintiff speaks for the ecological unit of life that is part of it. Those people who have a meaningful relation to that body of water -- whether it be a fisherman, a canoeist, a zoologist, or a logger -- must be able to speak for the values which the river represents and which are threatened with destruction. . . .

The voice of the inanimate object, therefore, should not be stilled. That does not mean that the judiciary takes over the managerial functions from the federal agency. It merely means that before these priceless bits of Americana (such as a valley, an alpine meadow, a river, or a lake) are forever lost or are so transformed as to be reduced to the eventual rubble of our urban environment, the voice of the existing beneficiaries of these environmental wonders should be heard.

Perhaps they will not win. Perhaps the bulldozers of "progress" will plow under all the aesthetic wonders of this beautiful land. That is not the present question. The sole question is, who has standing to be heard?

. . . . Those who merely are caught up in environmental news or propaganda and flock to defend these waters or areas may be treated differently. That is why these environmental issues should be tendered by the inanimate object itself. Then there will be assurances that all of the forms of life which it represents will stand before the court - the pileated woodpecker as well as the coyote and bear, the lemmings as well as the trout in the streams. Those inarticulate members of the ecological group cannot speak. But those people who have so frequented the place as to know its values and wonders will be able to speak for the entire ecological community. . . .

That, as I see it, is the issue of "standing" in the present case and controversy.

WORLD-WIDE VOLKSWAGEN CORP. ET AL. v. WOODSON,

DISTRICT JUDGE OF CREEK COUNTY, OKLAHOMA, ET AL.

SUPREME COURT OF THE UNITED STATES
444 U.S. 286; 100 S. Ct. 559
January 21, 1980, Decided

WHITE, J., delivered the opinion of the Court, in which BURGER, C. J., and STEWART, POWELL, REHNQUIST, and STEVENS, JJ., joined. BRENNAN, J., filed a dissenting opinion. MARSHALL, J., filed a dissenting opinion, in which BLACKMUN, J., joined. BLACKMUN, J., filed a dissenting opinion.



OPINION: MR. JUSTICE WHITE delivered the opinion of the Court.
The issue before us is whether, consistently with the Due Process Clause of the Fourteenth Amendment, an Oklahoma court may exercise in personam jurisdiction over a nonresident automobile retailer and its wholesale distributor in a products-liability action, when the defendants' only connection with Oklahoma is the fact that an automobile sold in New York to New York residents became involved in an accident in Oklahoma.
Respondents Harry and Kay Robinson purchased a new Audi automobile from petitioner Seaway Volkswagen, Inc. (Seaway), in Massena, N. Y., in 1976. The following year the Robinson family, who resided in New York, left that State for a new home in Arizona. As they passed through the State of Oklahoma, another car struck their Audi in the rear, causing a fire which severely burned Kay Robinson and her two children. The Robinsons subsequently brought a products-liability action in the District Court for Creek County, Okla., claiming that their injuries resulted from defective design and placement of the Audi's gas tank and fuel system. They joined as defendants the automobile's manufacturer, Audi NSU Auto Union Aktiengesellschaft (Audi); its importer, Volkswagen of America, Inc. (Volkswagen); its regional distributor, petitioner World-Wide Volkswagen Corp. (World-Wide); and its retail dealer, petitioner Seaway. Seaway and World-Wide entered special appearances, claiming that Oklahoma's exercise of jurisdiction over them would offend the limitations on the State's jurisdiction imposed by the Due Process Clause of the Fourteenth Amendment.
The facts presented to the District Court showed that World-Wide is incorporated and has its business office in New York. It distributes vehicles, parts, and accessories, under contract with Volkswagen, to retail dealers in New York, New Jersey, and Connecticut. Seaway, one of these retail dealers, is incorporated and has its place of business in New York. Insofar as the record reveals, Seaway and World-Wide are fully independent corporations whose relations with each other and with Volkswagen and Audi are contractual only. Respondents adduced no evidence that either World-Wide or Seaway does any business in Oklahoma, ships or sells any products to or in that State, has an agent to receive process there, or purchases advertisements in any media calculated to reach Oklahoma. In fact, as respondents' counsel conceded at oral argument, there was no showing that any automobile sold by World-Wide or Seaway has ever entered Oklahoma with the single exception of the vehicle involved in the present case.
Despite the apparent paucity of contacts between petitioners and Oklahoma, the District Court rejected their constitutional claim and reaffirmed that ruling in denying petitioners' motion for reconsideration. . . .
We granted certiorari to consider an important constitutional question with respect to state-court jurisdiction and to resolve a conflict between the Supreme Court of Oklahoma and the highest courts of at least four other States. We reverse.

II The Due Process Clause of the Fourteenth Amendment limits the power of a state court to render a valid personal judgment against a nonresident defendant. A judgment rendered in violation of due process is void in the rendering State and is not entitled to full faith and credit elsewhere. Due process requires that the defendant be given adequate notice of the suit. . . . In the present case, it is not contended that notice was inadequate; the only question is whether these particular petitioners were subject to the jurisdiction of the Oklahoma courts. As has long been settled, and as we reaffirm today, a state court may exercise personal jurisdiction over a nonresident defendant only so long as there exist "minimum contacts" between the defendant and the forum State. The concept of minimum contacts, in turn, can be seen to perform two related, but distinguishable, functions. It protects the defendant against the burdens of litigating in a distant or inconvenient forum. And it acts to ensure that the States, through their courts, do not reach out beyond the limits imposed on them by their status as coequal sovereigns in a federal system.


The protection against inconvenient litigation is typically described in terms of "reasonableness" or "fairness." We have said that the defendant's contacts with the forum State must be such that maintenance of the suit "does not offend 'traditional notions of fair play and substantial justice.'" The relationship between the defendant and the forum must be such that it is "reasonable . . . to require the corporation to defend the particular suit which is brought there." Implicit in this emphasis on reasonableness is the understanding that the burden on the defendant, while always a primary concern, will in an appropriate case be considered in light of other relevant factors, including the forum State's interest in adjudicating the dispute; the plaintiff's interest in obtaining convenient and effective relief; the interstate judicial system's interest in obtaining the most efficient resolution of controversies; and the shared interest of the several States in furthering fundamental substantive social policies.
The limits imposed on state jurisdiction by the Due Process Clause, in its role as a guarantor against inconvenient litigation, have been substantially relaxed over the years. . . .
Nevertheless, we have never accepted the proposition that state lines are irrelevant for jurisdictional purposes, nor could we, and remain faithful to the principles of interstate federalism embodied in the Constitution. The economic interdependence of the States was foreseen and desired by the Framers. In the Commerce Clause, they provided that the Nation was to be a common market, a "free trade unit" in which the States are debarred from acting as separable economic entities. But the Framers also intended that the States retain many essential attributes of sovereignty, including, in particular, the sovereign power to try causes in their courts. The sovereignty of each State, in turn, implied a limitation on the sovereignty of all of its sister States -- a limitation express or implicit in both the original scheme of the Constitution and the Fourteenth Amendment.
Hence, even while abandoning the shibboleth that "[the] authority of every tribunal is necessarily restricted by the territorial limits of the State in which it is established," we emphasized that the reasonableness of asserting jurisdiction over the defendant must be assessed "in the context of our federal system of government," and stressed that the Due Process Clause ensures not only fairness, but also the "orderly administration of the laws." . . .

Even if the defendant would suffer minimal or no inconvenience from being forced to litigate before the tribunals of another State; even if the forum State has a strong interest in applying its law to the controversy; even if the forum State is the most convenient location for litigation, the Due Process Clause, acting as an instrument of interstate federalism, may sometimes act to divest the State of its power to render a valid judgment.

III Applying these principles to the case at hand, we find in the record before us a total absence of those affiliating circumstances that are a necessary predicate to any exercise of state-court jurisdiction. Petitioners carry on no activity whatsoever in Oklahoma. They close no sales and perform no services there. They avail themselves of none of the privileges and benefits of Oklahoma law. They solicit no business there either through salespersons or through advertising reasonably calculated to reach the State. Nor does the record show that they regularly sell cars at wholesale or retail to Oklahoma customers or residents or that they indirectly, through others, serve or seek to serve the Oklahoma market. In short, respondents seek to base jurisdiction on one, isolated occurrence and whatever inferences can be drawn therefrom: the fortuitous circumstance that a single Audi automobile, sold in New York to New York residents, happened to suffer an accident while passing through Oklahoma.

It is argued, however, that because an automobile is mobile by its very design and purpose it was "foreseeable" that the Robinsons' Audi would cause injury in Oklahoma. Yet "foreseeability" alone has never been a sufficient benchmark for personal jurisdiction under the Due Process Clause. . . . If foreseeability were the criterion, a local California tire retailer could be forced to defend in Pennsylvania when a blowout occurs there. . .


This is not to say, of course, that foreseeability is wholly irrelevant. But the foreseeability that is critical to due process analysis is not the mere likelihood that a product will find its way into the forum State. Rather, it is that the defendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there. The Due Process Clause, by ensuring the "orderly administration of the laws," gives a degree of predictability to the legal system that allows potential defendants to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit. When a corporation "purposefully avails itself of the privilege of conducting activities within the forum State," it has clear notice that it is subject to suit there, and can act to alleviate the risk of burdensome litigation by procuring insurance, passing the expected costs on to customers, or, if the risks are too great, severing its connection with the State. Hence if the sale of a product of a manufacturer or distributor such as Audi or Volkswagen is not simply an isolated occurrence, but arises from the efforts of the manufacturer or distributor to serve, directly or indirectly, the market for its product in other States, it is not unreasonable to subject it to suit in one of those States if its allegedly defective merchandise has there been the source of injury to its owner or to others. The forum State does not exceed its powers under the Due Process Clause if it asserts personal jurisdiction over a corporation that delivers its products into the stream of commerce with the expectation that they will be purchased by consumers in the forum State. . . . But there is no such or similar basis for Oklahoma jurisdiction over World-Wide or Seaway in this case. Seaway's sales are made in Massena, N. Y. World-Wide's market, although substantially larger, is limited to dealers in New York, New Jersey, and Connecticut. There is no evidence of record that any automobiles distributed by World-Wide are sold to retail customers outside this tristate area. It is foreseeable that the purchasers of automobiles sold by World-Wide and Seaway may take them to Oklahoma. But the mere "unilateral activity of those who claim some relationship with a nonresident defendant cannot satisfy the requirement of contact with the forum State."
In a variant on the previous argument, it is contended that jurisdiction can be supported by the fact that petitioners earn substantial revenue from goods used in Oklahoma. The Oklahoma Supreme Court so found drawing the inference that because one automobile sold by petitioners had been used in Oklahoma, others might have been used there also. While this inference seems less than compelling on the facts of the instant case, we need not question the court's factual findings in order to reject its reasoning. This argument seems to make the point that the purchase of automobiles in New York, from which the petitioners earn substantial revenue, would not occur but for the fact that the automobiles are capable of use in distant States like Oklahoma. Respondents observe that the very purpose of an automobile is to travel, and that travel of automobiles sold by petitioners is facilitated by an extensive chain of Volkswagen service centers throughout the country, including some in Oklahoma. However, financial benefits accruing to the defendant from a collateral relation to the forum State will not support jurisdiction if they do not stem from a constitutionally cognizable contact with that State. In our view, whatever marginal revenues petitioners may receive by virtue of the fact that their products are capable of use in Oklahoma is far too attenuated a contact to justify that State's exercise of in personam jurisdiction over them.
Because we find that petitioners have no "contacts, ties, or relations" with the State of Oklahoma, . . . the judgment of the Supreme Court of Oklahoma is
Reversed.

ERIE RAILROAD CO. v. TOMPKINS,


U.S. Supreme Court

304 U.S. 64 (1938)

Decided April 25, 1938.

Mr. Justice BRANDEIS delivered the opinion of the Court.

The question for decision is whether the oft-challenged doctrine of Swift v. Tyson shall now be disapproved.

Tompkins, a citizen of Pennsylvania, was injured on a dark night by a passing freight train of the Erie Railroad Company while walking along its right of way at Hughestown in that state. He claimed that the accident occurred through negligence in the operation, or maintenance, of the train; that he was rightfully on the premises as licensee because on a commonly used beaten footpath which ran for a short distance alongside the tracks; and that he was struck by something which looked like a door projecting from one of the moving cars. To enforce that claim he brought an action in the federal court for Southern New York, which had jurisdiction because the company is a corporation of that state. It denied liability; and the case was tried by a jury.  The Erie insisted that its duty to Tompkins was no greater than that owed to a trespasser. It contended, among other things, that its duty to Tompkins, and hence its liability, should be determined in accordance with the Pennsylvania law; that under the law of Pennsylvania, as declared by its highest court, persons who use pathways along the railroad right of way-that is, a longitudinal pathway as distinguished from a crossing-are to be deemed trespassers; and that the railroad is not liable for injuries to undiscovered trespassers resulting from its negligence, unless it be wanton or willful. Tompkins denied that any such rule had been established by the decisions of the Pennsylvania courts; and contended that, since there was no statute of the state on the subject, the railroad's duty and liability is to be determined in federal courts as a matter of general law.

The trial judge refused to rule that the applicable law precluded recovery. The jury brought in a verdict of $30,000; and the judgment entered thereon was affirmed by the Circuit Court of Appeals, which held . . . that it was unnecessary to consider whether the law of Pennsylvania was as contended, because the question was one not of local, but of general, law, and that 'upon questions of general law the federal courts are free, in absence of a local statute, to exercise their independent judgment as to what the law is; and it is well settled that the question of the responsibility of a railroad for injuries caused by its servants is one of general law. . . . Where the public has made open and notorious use of a railroad right of way for a long period of time and without objection, the company owes to persons on such permissive pathway a duty of care in the operation of its trains. . . . It is likewise generally recognized law that a jury may find that negligence exists toward a pedestrian using a permissive path on the railroad right of way if he is hit by some object projecting from the side of the train.' . . . .

Because of the importance of the question whether the federal court was free to disregard the alleged rule of the Pennsylvania common law, we granted certiorari. . . .

Swift v. Tyson [1842], held that federal courts exercising jurisdiction on the ground of diversity of citizenship need not, in matters of general jurisprudence, apply the unwritten law of the state as declared by its highest court; that they are free to exercise an independent judgment as to what the common law of the state is-or should be . . . Criticism of the doctrine became widespread . . . . The injustice and confusion incident to the doctrine of Swift v. Tyson have been repeatedly urged as reasons for abolishing or limiting diversity of citizenship jurisdiction. . . .

Except in matters governed by the Federal Constitution or by acts of Congress, the law to be applied in any case is the law of the state. And whether the law of the state shall be declared by its Legislature in a statute or by its highest court in a decision is not a matter of federal concern. There is no federal general common law. Congress has no power to declare substantive rules of common law applicable in a state whether they be local in their nature or 'general,' be they commercial law or a part of the law of torts. And no clause in the Constitution purports to confer such a power upon the federal courts. . . .

The fallacy underlying the rule declared in Swift v. Tyson is made clear by Mr. Justice Holmes. The doctrine rests upon the assumption that there is 'a transcendental body of law outside of any particular State but obligatory within it unless and until changed by statute,' that federal courts have the power to use their judgment as to what the rules of common law are; and that in the federal courts 'the parties are entitled to an independent judgment on matters of general law'. . .

Thus the doctrine of Swift v. Tyson is, as Mr. Justice Holmes said, 'an unconstitutional assumption of powers by the Courts of the United States which no lapse of time or respectable array of opinion should make us hesitate to correct.' In disapproving that doctrine we . . . declare that in applying the doctrine this Court and the lower courts have invaded rights which in our opinion are reserved by the Constitution to the several states.

The defendant contended that by the common law of Pennsylvania as declared by its highest court . . . . the only duty owed to the plaintiff was to refrain from willful or wanton injury. The plaintiff denied that such is the Pennsylvania law.  In support of their respective contentions the parties discussed and cited many decisions of the Supreme Court of the state. The Circuit Court of Appeals ruled that the question of liability is one of general law; and on that ground declined to decide the issue of state law. As we hold this was error, the judgment is reversed and the case remanded to it for further proceedings in conformity with our opinion.

REVERSED.

Mr. Justice CARDOZO took no part in the consideration or decision of this case.

Mr. Justice BUTLER (dissenting).

George WENDELKEN, a single man, Petitioner, v. SUPERIOR

COURT of the State of Arizona, In and For the COUNTY OF

PIMA, and the Honorable Lillian S. Fisher, a Judge thereof;

and Henry S. Sherrill, Real Party in Interest, Respondents

Supreme Court of Arizona


137 Ariz. 455; 671 P.2d 896; 1983
September 26, 1983

JUDGES: In Banc. Gordon, Vice Chief Justice. Holohan, C.J., and Hays, Cameron and Feldman, JJ., concur.


OPINION BY: GORDON
George Wendelken, the plaintiff-petitioner, is a sixty-six year old widower and a member of an organization known as "Arizona Singles Who's Who." Wendelken is a resident of Scottsdale, Arizona. The defendant-real party in interest-respondent, Henry S. Sherrill, is also a member of "Arizona Singles Who's Who" and, in addition, belongs to a California organization, "International Singles Who's Who." Sherrill is a resident of Tucson, Arizona, with his home and business there. Sherrill also has a vacation home in Puerto Penasco (Rocky Point), Sonora, Mexico.
Sometime prior to October 12, 1979, the "Arizona Singles Who's Who" circulated an invitation from Sherrill to club members in Phoenix soliciting reservations for a Columbus Day weekend party to be held at Sherrill's Puerto Penasco property. A similar invitation was circulated by the "International Singles Who's Who." A personal letter from Sherrill detailing the planned weekend was also distributed.
With two friends, Wendelken arrived at Sherrill's Puerto Penasco home during the afternoon of October 12, 1979. Upon his arrival, he discovered that the Mexican government had shut off all electricity to the Sherrill property. It was still daylight, though, and Wendelken and his companions were able to move about the house and to walk down a path to the beach without difficulty. However, after dark, the house and grounds were illuminated only by candlelight. While walking along the path that led from Sherrill's house to the beach, Wendelken fell several feet over the edge of the path and sustained a broken hip. Other guests took Wendelken to a Mexican clinic for examination and then arranged with the Arizona Department of Public Safety for helicopter transportation to the Tucson Veteran's Administration Hospital. There, he underwent surgery and subsequent care.
Wendelken timely filed suit against Sherrill in Pima County, Arizona, seeking compensation for his injuries, his medical expenses, and his lost earnings. Trial on the matter was set for February 8, 1983. On January 5, 1983, the trial court, the Honorable Lillian S. Fisher presiding, entered a minute entry granting Sherrill's Motion for Partial Summary Judgment and ordering that Mexican law would apply to "the issues of negligence, damages, and standard of care, etc." Wendelken filed a Petition for Special Action with the Court of Appeals Division Two to vacate the trial court's order. Division Two dismissed that petition on March 10, 1983. This petition for review followed. Jurisdiction is found pursuant to the Arizona Constitution and the Arizona Rules of Civil Appellate Procedure. As we find that Arizona law should apply to all aspects of this case, we vacate the Court of Appeal's order dated March 10, 1983, as well as the trial court's ruling which granted Sherrill's Motion for Partial Summary Judgment, and remand the matter to the Superior Court for further proceedings consistent with this opinion.
This petition for review raises only one issue: whether the laws of the country of Mexico or the laws of the State of Arizona should apply to this action. To make this choice between laws, we must look to the conflicts laws of Arizona, the forum state.
In Schwartz v. Schwartz, 103 Ariz. 562 (1968), this Court adopted the rules embodied in the Restatement (Second) of Conflict of Laws as the rules for Arizona. In so doing, we discarded the doctrine of lex loci delicti. Had this case arisen while lex loci was still in effect, our response would have been automatic: since this incident occurred in Mexico, that country's law would be applied to all substantive issues. However, as this case arose after the demise of lex loci, our response is not at all automatic.
The Restatement (Second) § 145 sets forth the general principle by which tort choice of law questions are to be decided. Approved by this court in Schwartz, § 145 provides:

"(1) The rights and liabilities of the parties with respect to an issue in tort are determined by the local law of the state which, with respect to that issue, has the most significant relationship to the occurrence and the parties under the principles stated in § 6.

"(2) Contacts to be taken into account in applying the principles of § 6 to determine the law applicable to an issue include:
"(a) the place where the injury occurred,

"(b) the place where the conduct causing the injury occurred,

"(c) the domicil, residence, nationality, place of incorporation and place of business of the parties, and

"(d) the place where the relationship, if any, between the parties is centered. "These contacts are to be evaluated according to their relative importance with respect to the particular issue."

. . . . As § 145(1) makes clear, our task is to determine which state has the "most significant relationship" to the parties and the issues in question. Of the four contacts specified in § 145(2), two obviously attach to Mexico -- the place of Wendelken's injury and the place of Sherrill's alleged negligence. However, the other two contacts attach to Arizona -- both Wendelken and Sherrill are domiciled in Arizona, both are residents of Arizona, both are American nationals, Sherrill advertised this weekend party in Arizona via an Arizona organization of which both Sherrill and Wendelken are members, the solicitation reached Wendelken in Arizona, and the reservation was accepted in Arizona. Only the destination involved was Mexico. The "relationship between the parties" centered in Arizona. As we have made clear, "the determination of which state has the most significant contacts is primarily qualitative, not quantitative." Schwartz, at 257. Having established the numerical distribution of the important contacts, we now must evaluate those contacts to determine which law should apply. . . . .
Our choice of law in this matter should have little effect on the harmonious relationship or on the commercial interaction between Arizona and Mexico. This was a purely private relationship between two Arizona residents. Neither public accommodation nor public transportation facilities was utilized. Had this trip been sponsored by the Mexican government instead of by a private American citizen or had the accident occurred at a Mexican hotel instead of at a private home, Mexican tourism might have been affected. In either event, this element would take on a greater weight in the choice of law decision. Those facts, however, are not before us.
Arizona, in addition to being the forum state and the place of the trial, has considerable interest in this matter. Both parties are domiciliaries of Arizona giving this state a natural interest in each of them. One aspect of that interest is the appropriate compensation of Wendelken for his losses. Striving insofar as possible to make the injured party whole, Arizona allows unlimited recovery for actual damages, expenses for past and prospective medical care, past and prospective pain and suffering, lost earnings, and diminished earning capacity. This is in sharp contrast to the compensatory scheme of Mexico. The parties have supplied this Court with a translation of Article 1915 of the Civil Code of Mexico. According to that translation, not only are damages resulting from personal injury recoverable only to the extent allowed by a quota system included in the Mexican Federal Labor Law, but the maximum wage that can be taken into account in this determination is twenty-five pesos per day. [On the date of Wendelken's accident, twenty-five pesos equaled $1.0975. At current exchange rates, the value is only $0.1675.]

As both Wendelken and Sherrill are Arizona residents, there is little reason to apply Mexico's measure of damages and undercompensate Wendelken for his losses. . . . The measure of Wendelken's damage recovery for his injuries is of interest to this state not only because he is a domiciliary, but also because appropriate compensation helps guarantee payment to his Arizona medical providers and because, if other resources are not available, the burden for caring for his injuries will fall upon the State of Arizona.


Mexico also has an interest in the duties and the extent of the liability imposed upon Sherrill. This interest is based on Sherrill's possessory interest in Mexican land. The policy of limited liability just explained is apparently designed to shield Mexican citizens from large judgments and is undoubtedly linked to Mexico's socialized system of health care. As an injured Mexican's health care costs would be paid for, the Civil Code limits damages to reimbursement, by the above-mentioned quota system, of his lost wages. As neither Wendelken nor Sherrill is a Mexican citizen or a Mexican wage-earner, Mexico's interest does not overcome that of Arizona.
Respondent Sherrill seeks to distinguish this case from automobile accident cases involving forum state plaintiffs and forum state defendants but an out-of-state accident. In those cases, because mere fortuity determines the place of the injury, the forum state law is generally applied. Sherrill argues that this injury and the alleged negligence that caused it could only have occurred in Mexico and asserts that Mexico's interest in establishing duties and liabilities of possessors of Mexican land should be the decisive consideration in our choice of law determination. This would signal a return to the doctrine of lex loci delicti in those cases where the duties of owners and occupiers of land are at issue. We refuse to return to lex loci for these cases. . . .

As neither party anticipated a negligent act, it is likely that neither acted with any thought to the consequences of his conduct or to the law that might be applied to any dispute resolution. However, Sherrill can not claim that the imposition of Arizona negligence or damage standards is an unfair surprise. He has offered no indication that he relied in any way on the Mexican limited liability scheme. Rather, he concedes that he purchased liability insurance on his Puerto Penasco property through an Arizona insurance carrier in the amount of $300,000.00, and obviously relied on the expectation that this Arizona insurance would cover any liability resulting from his interest in the Mexican land. . . . . Finally, Mexican laws, though in Spanish, could certainly be presented by counsel to the finder of fact in such a way that its application would be no more difficult than the application of Arizona law.


Having fully considered the relevant factors and the interests of both states, we conclude that Arizona has the most significant relationship to this occurrence and to these parties. As this state borders the state of Sonora, Mexico, our citizens are frequent visitors there and this issue will undoubtedly arise again. Our decision does not affect the sovereignty of the State of Sonora nor the Country of Mexico, but does protect our own citizens. We therefore vacate the trial court's ruling which granted Sherrill's Motion for Partial Summary Judgment and ordered that Mexican law would apply to all substantive issues and remand to the Superior Court for further proceeding.

WILLIAM BELK, et al

Plaintiffs-Appellants, v. THE UNITED STATES,

Defendant-Appellee

UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT
858 F.2d 706
September 22, 1988, Decided

JUDGES: Friedman and Newman, Circuit Judges, and Bennett, Senior Circuit Judge. Bennett, Senior Circuit Judge, concurring.


OPINION: FRIEDMAN, Circuit Judge.
This is an appeal from a judgment of the United States Claims Court granting summary judgment dismissing a complaint by former hostages held in the United States Embassy in Tehran, Iran. The appellants seek just compensation for the alleged taking by the United States of their property right to sue Iran for injuries sustained while held hostage  a right the United States extinguished in connection with obtaining the release of the hostages. The Claims Court dismissed the complaint on alternative grounds: (1) that the government's action did not constitute a taking, and (2) that the complaint would require the resolution of political questions, which the court could not do. . . . . We affirm.
The appellants are 15 United States citizens, 13 of whom were held hostage in the United States Embassy in Tehran from November 4, 1979 to January 20, 1981, and the wives of two of the hostages. The United States had attempted unsuccessfully to obtain the release of the hostages in various ways. . . . The hostages finally were released by agreements arranged through the government of Algeria.
The United States signed these agreements (commonly referred to as the Algiers Accords) on January 19, 1981. On the same day President Carter issued a series of Executive orders implementing the terms of the agreements, . . . and on February 24, 1981, President Reagan issued an Executive order "ratifying" the January 19th Executive orders. . . . The Supreme Court upheld the Executive orders . . . The relevant provision of the Algiers Accords prohibits United States nationals from prosecuting claims related to the seizure of the hostages, their detention, and injuries to them or their properties that arose out of events that occurred before the date of the Accords. The day after the United States signed the Algiers Accords, the hostages were released.
Following the appellants' release, they filed the present suit against the United States in the Claims Court. The complaint alleged that the appellants had "valid and valuable causes of action against the Islamic Republic of Iran, its officials, agents, instruments, and employees" resulting from the mistreatment the appellants suffered while being held hostage; that before the Accords were executed, the appellants "were entitled to prosecute their valid and valuable causes of action and to collect upon their claims" in the "federal district courts of the United States" and "in Iran itself"; and that by executing the Accords the United States "barred plaintiffs from prosecuting any and all of their existing and potential causes of action against Iran in any court or forum anywhere in the world" and thereby "extinguished plaintiffs' valid causes of action."
According to the complaint, these causes of action "constituted valuable private property rights," which the United States has "taken for public use without just compensation." The complaint asserted that the appellants are entitled to recover from the United States just compensation "equivalent to the damages they could have recovered from Iran had defendant not extinguished their claims."
The United States moved for summary judgment. The Claims Court granted the motion, and dismissed the complaint. The court held that there had been no taking because "where a governmental action is intended to primarily benefit particular individuals, a taking has not occurred, even though there is an incidental benefit to the public." Based on the undisputed facts, the court ruled that the plaintiffs were the principal beneficiaries of the President's actions, even though there was an incidental benefit to all Americans. The court noted that "'the president's power to espouse and settle claims of our nationals against foreign governments is of ancient origin and constitutes a well-established aspect of international law.'" . . . The court concluded that the facts "do not require in the interests of 'justice and fairness' that plaintiffs' [sic] receive compensation from the United States for the settlement of their claims against Iran."
Alternatively, the court held that the complaint raised a political question because "this case involves a policy decision made by the President during a crisis situation." The court noted that "'[a] judicial inquiry into whether the President could have extracted a more generous settlement from another country would seriously interfere with his ability to carry on diplomatic relations.'" The court concluded that the President's extinguishment of the plaintiffs' claims could not ground a cause of action for a taking "because such an action is not susceptible to judicial review."
On the undisputed facts, the Claims Court correctly held that the appellants have not stated a valid or judicially cognizable claim for a taking of private property for a public use, for which the United States is required to pay just compensation. [hereafter, the court discusses the Fifth Amendment issue regarding an unconstitutional "taking"]
The question . . . . is whether the President's action in extinguishing the appellants' right to sue Iran in exchange for their freedom, constituted a taking of property for which the United States is required to pay just compensation. We agree with the Claims Court that on the undisputed facts of this case the appellants have not stated a cause of action for a taking based on the President's implementing the Algiers Accords.
We also agree with the Claims Court's . . . holding that adjudication of the appellants' taking claim would involve the court in the resolution of a political question. The President is "the sole organ of the federal government in the field of international relations." Issues involving foreign relations frequently present questions not meet for judicial determination. In Baker v. Carr (1962), the Court explained: Prominent on the surface of any case held to involve a political question is found a textually demonstrable constitutional commitment of the issue to a coordinate political department; or a lack of judicially discoverable and manageable standards for resolving it; or the impossibility of deciding without an initial policy determination of a kind clearly for nonjudicial discretion; or the impossibility of a court's undertaking independent resolution without expressing lack of the respect due coordinate branches of government; or an unusual need for unquestioning adherence to a political decision already made; or the potentiality of embarrassment from multifarious pronouncements by various departments on one question.

Most, if not all, of those concerns are present in this case. It involves a policy decision made by the President during a time of crisis. . . . The determination whether and upon what terms to settle the dispute with Iran over its holding of the hostages and obtain their release, necessarily was for the President to make in his foreign relations role. That determination was "of a kind clearly for nonjudicial discretion," and there are no "judicially discoverable and manageable standards" for reviewing such a Presidential decision. A judicial inquiry into whether the President could have extracted a more favorable settlement would seriously interfere with the President's ability to conduct foreign relations.

Although the appellants underwent an agonizing experience, they have not stated a valid claim for a taking by the United States of their causes of action against Iran that, as they frame their case, is appropriate for judicial resolution. If there is to be any compensation of the appellants for the mistreatment and suffering they underwent during their captivity as hostages in Iran, it must be provided by one of the other "coordinate branches of government."
CONCLUSION
The judgment of the United States Claims Court granting summary judgment dismissing the complaint is AFFIRMED.
FRANK J. FERLITO and SUSAN FERLITO, Plaintiffs, v. JOHNSON & JOHNSON PRODUCTS, INC., a New Jersey corporation, Defendant
Civil Action No. 88-71248
United States District Court For The Eastern District Of Michigan, Southern Division
771 F. Supp. 196
(August 22, 1991)

JUDGE: Paul V. Gadola, United States District Judge.


Memorandum Opinion And Order Granting Defendant's Motion For Judgment Notwithstanding The Verdict:
Plaintiffs Susan and Frank Ferlito, husband and wife, attended a Halloween party in 1984 dressed as Mary (Mrs. Ferlito) and her little lamb (Mr. Ferlito). Mrs. Ferlito had constructed a lamb costume for her husband by gluing cotton batting manufactured by defendant Johnson & Johnson Products ("JJP") to a suit of long underwear. She had also used defendant's product to fashion a headpiece, complete with ears. The costume covered Mr. Ferlito from his head to his ankles, except for his face and hands, which were blackened with Halloween paint. At the party Mr. Ferlito attempted to light his cigarette by using a butane lighter. The flame passed close to his left arm, and the cotton batting on his left sleeve ignited. Plaintiffs sued defendant for injuries they suffered from burns which covered approximately one-third of Mr. Ferlito's body.
Following a jury verdict entered for plaintiffs November 2, 1989, the Honorable Ralph M. Freeman entered a judgment for plaintiff Frank Ferlito in the amount of $ 555,000 and for plaintiff Susan Ferlito in the amount of $70,000. Judgment was entered November 7, 1989.
Subsequently, on November 16, 1989, defendant JJP filed a timely motion for judgment notwithstanding the verdict pursuant to Fed.R.Civ.P. 50(b) or, in the alternative, for new trial. Plaintiffs filed their response to defendant's motion December 18, 1989; and defendant filed a reply January 4, 1990. Before reaching a decision on this motion, Judge Freeman died. The case was reassigned to this court April 12, 1990. . . .
Judge Freeman died before ruling on defendant's motion for judgment notwithstanding the verdict or, in the alternative, for new trial, after a jury verdict was returned. Rule 63 clearly states that, as the successor judge, I may perform those duties.

MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT


Issuance of a judgment notwithstanding the verdict ("j.n.o.v.") is authorized by Rule 50(b) of the Federal Rules of Civil Procedure, which provides in relevant part:

Whenever a motion for a directed verdict made at the close of all the evidence is denied or for any reason is not granted, the court is deemed to have submitted the action to the jury subject to a later determination of the legal questions raised by the motion. Not later than 10 days after entry of judgment, a party who has moved for a directed verdict may move to have the verdict and any judgment entered thereon set aside and to have judgment entered in accordance with the party's motion for a directed verdict . . . . [A] new trial may be prayed for in the alternative. If a verdict was returned the court may allow the judgment to stand or may reopen the judgment and either order a new trial or direct the entry of judgment as if the requested verdict had been directed.

Rule 50(b) Fed.R.Civ.P.
Defendant JJP filed two motions for a directed verdict, the first on October 27, 1989, at the close of plaintiffs' proofs, and the second on October 30, 1989, at the close of defendant's proofs. Judge Freeman denied both motions without prejudice. Judgment for plaintiffs was entered November 7, 1989; and defendant's instant motion, filed November 16, 1989, was filed in a timely manner.
The standard for determining whether to grant a j.n.o.v. is identical to the standard for evaluating a motion for directed verdict:

In determining whether the evidence is sufficient, the trial court may neither weigh the evidence, pass on the credibility of witnesses nor substitute its judgment for that of the jury. Rather, the evidence must be viewed in the light most favorable to the party against whom the motion is made, drawing from that evidence all reasonable inferences in his favor.


[cites omitted]. . . If after reviewing the evidence, however, the trial court is of the opinion that reasonable minds could not come to the result reached by the jury, then the motion for j.n.o.v. should be granted. . . . .[cites omitted] The trial court makes its determination as a matter of law. . . .


To recover in a "failure to warn" product liability action, a plaintiff must prove each of the following four elements of negligence: (1) that the defendant owed a duty to the plaintiff, (2) that the defendant violated that duty, (3) that the defendant's breach of that duty was a proximate cause of the damages suffered by the plaintiff, and (4) that the plaintiff suffered damages. . . . . [cites omitted]
To establish a prima facie case that a manufacturer's breach of its duty to warn was a proximate cause of an injury sustained, a plaintiff must present evidence that the product would have been used differently had the proffered warnings been given. . . . [cites omitted] In the absence of evidence that a warning would have prevented the harm complained of by altering the plaintiff's conduct, the failure to warn cannot be deemed a proximate cause of the plaintiff's injury as a matter of law. Dunn, 121 Mich. App. at 85.
Similarly, a failure to warn cannot be deemed a proximate cause of injury if the plaintiff knew of the danger about which he claims the defendant failed to warn. Vroman v. Sears, Roebuck & Co., 387 F.2d 732 (6th Cir. 1967).
A manufacturer has a duty "to warn the purchasers or users of its product about dangers associated with intended use." [cites omitted] Conversely, a manufacturer has no duty to warn of a danger arising from an unforeseeable misuse of its product. [cites omitted] Thus, whether a manufacturer has a duty to warn depends on whether the use of the product and the injury sustained by it are foreseeable. [cites omitted] Whether a plaintiff's use of a product is foreseeable is a legal question to be resolved by the court. Trotter, supra. Whether the resulting injury is foreseeable is a question of fact for the jury. [cites omitted]
In the instant action no reasonable jury could find that JJP's failure to warn of the flammability of cotton batting was a proximate cause of plaintiffs' injuries because plaintiffs failed to offer any evidence to establish that a flammability warning on JJP's cotton batting would have dissuaded them from using the product in the manner that they did.
Plaintiffs repeatedly stated in their response brief that plaintiff Susan Ferlito testified that "she would never again use cotton batting to make a costume." Plaintiffs' Answer to Defendant JJP's Motion for J.N.O.V., pp. 1, 3, 4, 5. However, a review of the trial transcript reveals that plaintiff Susan Ferlito never testified that she would never again use cotton batting to make a costume. More importantly, the transcript contains no statement by plaintiff Susan Ferlito that a flammability warning on defendant JJP's product would have dissuaded her from using the cotton batting to construct the costume in the first place. At oral argument counsel for plaintiffs conceded that there was no testimony during the trial that either plaintiff Susan Ferlito or her husband, plaintiff Frank J. Ferlito, would have acted any different if there had been a flammability warning on the product's package. The absence of such testimony is fatal to plaintiffs' case; for without it, plaintiffs have failed to prove proximate cause, one of the essential elements of their negligence claim.
In addition, both plaintiffs testified that they knew that cotton batting burns when it is exposed to flame. Susan Ferlito testified that she knew at the time she purchased the cotton batting that it would burn if exposed to an open flame. Frank Ferlito testified that he knew at the time he appeared at the Halloween party that cotton batting would burn if exposed to an open flame. His additional testimony that he would not have intentionally put a flame to the cotton batting shows that he recognized the risk of injury of which he claims JJP should have warned. Because both plaintiffs were already aware of the danger, a warning by JJP would have been superfluous. Therefore, a reasonable jury could not have found that JJP's failure to provide a warning was a proximate cause of plaintiffs' injuries.
The evidence in this case clearly demonstrated that neither the use to which plaintiffs put JJP's product nor the injuries arising from that use were foreseeable. Susan Ferlito testified that the idea for the costume was hers alone. As described on the product's package, its intended uses are for cleansing, applying medications, and infant care. Plaintiffs' showing that the product may be use on occasion in classrooms for decorative purposes failed to demonstrate the foreseeability of an adult male encapsulating himself from head to toe in cotton batting and then lighting up a cigarette.

MOTION FOR NEW TRIAL


[omitted]

ORDER
NOW, THEREFORE, IT IS HEREBY ORDERED that defendant JJP's motion for judgment notwithstanding the verdict is GRANTED.


IT IS FURTHER ORDERED that the judgment entered November 2, 1989, is SET ASIDE.
IT IS FURTHER ORDERED that the clerk will enter a judgment in favor of the defendant JJP.



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